Tuesday, August 01, 2006

Outsourcing: Look beyond costs...

It's no surprising to see that according to a research done by Gartner, business process improvement is not among the top reasons for outsourcing in the companies.

High pressure from financial markets to increase profitability has resulted in emphasis on short-term financial goals and this has been automatically translated into supply chain actions plans such as outsourcing efforts. But is it really sustainable?

I don't think so. I agree with the point of view of Ousourcing Times that:

Instead of placing emphasis on low cost when choosing an outsourcing partner, companies will gain more by looking at the bigger picture, and scrutinizing if the firm has the necessary resources and the ability to deliver. The firm should be a part of the strategic decisions taken by the parent company, and commitments should be based on long-term returns that benefit the business as a whole, rather than just saving on short-term costs.

(Source: SupplyChainer.com)


Anonymous Anonymous said...

There is no doubt that cost is one of the measure considerations for outsourcing manufacturing activities or services. However quality and increased knowledge by cultural exchange are other two big factors. As a chain becomes longer and moves out of immediate geographic control of the customer, risks of failure increase.

12:42 PM  

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